Rockets and feathers

This effect has significant consequences for living standards and food security. Since 2019, food price inflation has outpaced general inflation in almost every OECD country, with UK food price growth peaking at a 45 year high in 2023. Households especially those on the lowest incomes are being hit hardest. Though eating more vegetables, beans and pulses can be cheaper*, for families in the lowest income quintile a healthy diet now requires spending around 70% of disposable income after housing costs, placing basic nutritional security increasingly out of reach.**

The drivers of rising prices are clear and increasingly climate linked. Extreme heat, drought, floods, and climate-enabled crop disease have disrupted harvests across major producing regions from Spain to India to North America. These shocks no longer occur occasionally; they increasingly arrive in overlapping waves, compounding and reinforcing one another. Global food systems – still heavily dependent on fossil fuels for fertiliser, transport, processing, and packaging - remain acutely exposed. When the Ukraine invasion triggered a gas price crisis, fertiliser and feed costs surged, cascading rapidly into food prices, and pushing up household food bills by hundreds of pounds. Renewed conflict in the Middle East will generate similar pressures through energy and fertiliser markets.

ECIU’s analysis shows that these shocks do not simply lift prices temporarily but reset the entire system onto a higher cost baseline. In nominal terms, prices show only limited reversal after a shock. Across the price rises examined here, the median reversal is just 1% after six months, 5% after one year and 7% after two years. In wage-adjusted terms, the reversal is larger, but still incomplete: after two years, around 35% of the initial affordability shock has unwound. This still leaves around two‑thirds of the original affordability shock embedded, particularly in periods where wage growth is weak or unevenly distributed. Since the financial crisis, subdued wage growth has meant that recovery in food affordability has been slow and incomplete. Although wage growth has strengthened since 2020, it has still been outpaced by rising food prices.

A closer look at everyday staples reveals the scale of the divergence between costs and retail prices. During recent shocks commodity and energy costs spiked. As these only account for a proportion of food costs, underlying commodity and energy costs rose modestly compared to consumer prices, which typically increased by three to seven times as much.

These gaps rarely close after shocks subside. Climate change and volatile fossil fuel markets drive costs up quickly, but the system appears to lack mechanisms to bring prices back down. There are several potential reasons for this, that we outline in the penultimate section.

This matters for inflation, economic security, and the UK’s resilience. The Bank of England has warned that climate impacts are increasingly generating precisely the kind of inflationary shocks it is least equipped to tackle. This risks creating a vicious cycle in which climate-driven price pressures trigger higher interest rates, raise borrowing costs and slow wider economic growth, including in investments that reduce emissions – leaving us exposed to future climate shocks reinforcing the cycle.

These dynamics sit against a wider backdrop of risk. A recent national security assessment warns that UK food security is dangerously vulnerable to global ecosystem degradation and collapse. Highly concentrated supply chains – e.g. a single farm in Senegal supplies 60% of UK radishes and 50% of green beans in some months - leave the UK acutely exposed to climate‑driven disruption.

With climate impacts intensifying, national security warnings of incoming ecosystem degradation and collapse, geopolitical tensions rising, and fossil fuel dependence and volatility still baked into food production, further shocks are inevitable. Without action to build resilience - through diversified supply chains, lower fossil fuel reliance, and climate compatible agriculture – we risk eroding food affordability, deepening inequalities and undermining economic security.